Cowley v. Northern Pacific R. Co.
159 U.S. 569 (1895)

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U.S. Supreme Court

Cowley v. Northern Pacific R. Co., 159 U.S. 569 (1895)

Cowley v. Northern Pacific Railroad Company

No. 67

Argued and submitted October 22, 1895

Decided November 18, 1895

159 U.S. 569

Syllabus

In a proceeding commenced in a court of the State of Washington under the statutes of that state by filing a petition to set aside a judgment charged to have been obtained there through fraud and collusion between the plaintiff's attorney of record and the defendant's attorney of record

Page 159 U. S. 570

and against the plaintiff's instructions touching a pretended compromise, and removed on the defendant's motion to the circuit court of the United States for that circuit, it is held that the cause, although in the nature of a bill in equity, remained, so far as the rights of the plaintiff were concerned, a special proceeding under the territorial statute, and that the powers of the federal court in dealing with it were gauged not merely by its general equity jurisdiction, but by the special authority given the state courts by statute.

Federal courts may enforce on their equity or admiralty side new rights or privileges conferred by state or territorial statutes as they may enforce new rights of action, given by statute, upon their common law side.

The averment in such a petition that the case was a case of fraud within the provisions of the statute of the state was sufficient to give the federal court jurisdiction to act under the statute, and such jurisdiction could not be defeated by proof that no fraud was actually committed, but the plaintiff would be entitled to recover if he were able to show that he never assented to the pretended compromise, or that he repudiated it, and revoked the authority of his attorneys.

The case having been removed to the federal court upon the defendant's petition, it does not lie in its mouth to claim that that court had no jurisdiction of the case unless the court from which it was removed had no jurisdiction.

This was a proceeding originally instituted in the District Court of the Fourth Judicial District of Washington Territory under a territorial statute, to set aside a certain judgment rendered in a case brought by the railroad company against the appellant, Cowley, in the same court.

The facts of the case were substantially as follows: in 1886, the railroad company began an action against the appellant to recover possession of 120 acres of land within the limits of Spokane Falls. In answer to the complaint in that action, Cowley set up a contract of purchase of the land between himself and the railroad company, alleging that he had complied, or was ready to comply, with the terms of his contract, had gone into possession of the land pursuant thereto, and had made valuable improvements thereon to the amount of $1,500, and demanded a specific performance. This answer or counterclaim was denied by the railroad company in its reply, and the case, being thus at issue, was referred to a referee to take testimony. The case was set for hearing by the referee on May 10, 1888, and was afterwards adjourned to May 11.

Page 159 U. S. 571

On the day originally set for the hearing, the land agent of the railroad company made an oral offer to appellant's attorneys, who were to receive one-quarter of the proceeds of the action, to compromise the suit by the payment to appellant of $8,000 in cash, and the conveyance of seven and one-half acres of the land in question, the company to retain the remainder of the land. This offer the appellant's attorneys, Messrs. Ganahl & Hagan, advised him to accept. There was some dispute as to whether it was actually accepted or not, but the court found that it was. The allegation of the petition in this connection is

"that, after full and mature consideration of said proposition, said Cowley decided to reject the same, and so notified his attorneys, Messrs. Ganahl & Hagan, and being very anxious about having said cause prosecuted to a final and successful issue in the courts, and being desirous of having his case tried by attorneys having confidence in the merits thereof, he determined to associate other counsel with said Ganahl & Hagan in the defense of said cause, and so notified them, asking that such other counsel should take an equal share with said Ganahl & Hagan in the conduct and defense of said cause."

If the proposition was accepted, as claimed by the railroad company and found by the court, there is no doubt that it was subsequently repudiated by Cowley, who informed his attorneys that he was dissatisfied with it and desired to employ other counsel with them, to which they refused to consent except upon payment of their fees. There is no doubt that appellant also telegraphed the general land agent of the railroad company that he must have additional time to consider the proposition of compromise, to which the land agent replied that there was nothing to consider, the settlement having been made and the papers and money sent. The president of the First National Bank of Spokane Falls, to whom the money and papers were sent by the railroad company on May 16th, took them to the office of appellant's attorneys, and informed them that, on the execution of a quitclaim deed by appellant and his wife, the money would be paid over. But it seems the appellant refused to execute the deed, and has

Page 159 U. S. 572

ever since refused, and the money has ever since been in the hands of the president of the bank, ready to be turned over.

On the following day, May 17, appellant wrote to the attorney of the railroad company, and to its general land agent, that the offer was not accepted; that Ganahl & Hagan were no longer his attorneys, and that all further communication should be made through his attorneys, Messrs. Blake & Ridpah. These letters were received about May 18, and were answered to the effect that, until other attorneys were regularly substituted by an order of court, Messrs. Ganahl & Hagan would still be recognized by the company as appellant's attorneys. On the same day on which appellant wrote these letters, he also wrote Ganahl & Hagan stating that he discharged them as his attorneys, and that he had employed other counsel, to which they made reply that they demanded $4,000 for their fee, and would take nothing less, and that they had, on motion, set the case down to take testimony on Monday, May 21. On May 18, the referee set down the case to take testimony on May 21, and notified the attorneys for the respective parties. Appellant telegraphed the attorney of the railroad company that he could not go on upon that day, as he had employed new counsel, to which the attorney replied that he had made no arrangements for taking testimony, having supposed it would be unnecessary, and that, at any rate, he could not go on until the general land agent of the company was able to attend.

On May 31, which was the first day of the May term of the court, the attorney for the railroad company and Ganahl & Hagan, as attorneys for Cowley, entered into a stipulation to the effect that the case had been settled and compromised on the terms above mentioned, and that judgment should be entered for the plaintiff, the said railroad company, for the restitution of the premises demanded in the complaint, denying the relief prayed in defendant's answer, with costs against the plaintiff. Ganahl & Hagan also executed a receipt for the papers and money then in the First National Bank, though, in fact they never received the money, which is still in the bank on deposit. Upon this stipulation and receipt, judgment

Page 159 U. S. 573

was accordingly entered that the plaintiff railroad company recover of the defendant the possession of the premises described in the complaint, that a writ of restitution issue, that the relief prayed in defendant's answer be denied, and that plaintiff pay the costs. Defendant did not know that the stipulation had been made, or the receipt given, or judgment entered, until it had been done, and upon hearing of it, he protested against it.

Thereafter, and without taking any further proceeding in the original suit, appellant instituted this proceeding to set aside the judgment in the former case upon the ground of fraud and collusion between Ganahl & Hagan and the attorney for the railroad company and as being entered without authority. The proceeding was begun in the district court of the territory, and was afterwards proceeded with in the Superior Court of Spokane County, in the State of Washington. It was then removed into the circuit court of the United States, which rendered a decree dismissing the bill, from which decree Cowley took this appeal. The opinion of the circuit court is reported in 46 F. 325.

Page 159 U. S. 575

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